Legislative / Regulatory Archives - Energy, Chemical & Environmental Trends Watch

EPA Issues Final PFAS National Primary Drinking Water Regulation

Margaret Anne Hill and Camila Thorpe ●

On April 10, 2024, the Environmental Protection Agency (“EPA”) finalized the National Primary Drinking Water Regulation (“NPDWR”) for six per- and polyfluoroalkyl substances (“PFAS”). PFAS, also known as “forever chemicals,” are widely used in industry and consumer products. According to the EPA, these chemicals have been linked to serious adverse health effects, including cancer and other serious illnesses. The final rule establishes national standards for specific PFAS, both individually and as mixtures, often found in drinking water. ^[i]

The Final Rule

The final rule sets individual enforceable Maximum Contaminant Level (“MCL”) limits for five PFAS.^[ii] MCLs are the highest levels of a contaminant that are allowed in drinking water. For mixtures containing two or more of four PFAS,^[iii]the rule sets a Hazard Index Level. Finally, the rule also sets a Maximum Contaminant Level Goal (“MCLG”) for each individual PFAS and mixtures, which is a non-enforceable health goal set at a level below which there is no known or expected risk to health.

EPA’s Focus on Ethylene Oxide

Margaret Anne Hill, Holli B. Packer, and Robert P. Scott ●

The Environmental Protection Agency issued a final rule on March 14 that will require significantly reduced emissions from commercial facilities that sterilize medical devices and other equipment using ethylene oxide gas (“EtO Rule”). The EtO Rule amends the National Emission Standards for Hazardous Air Pollutants (“NESHAP”), 40 C.F.R. Part 63, Subpart O, and is projected to reduce EtO emissions by over 90 percent nationwide for commercial sterilizers. The impetus for the Rule is a complaint filed by Earthjustice on December 14, 2022, in which the non-governmental organization (“NGO”) requested both injunctive and declaratory relief based upon its claim that the Environmental Protection Agency (“EPA”) had violated Section 112(d) of the Clean Air Act for the past 16 years by failing to review and revise air toxics standards for commercial sterilizers.

Emissions Controls and Reporting

The EtO Rule imposes strengthened standards for EtO emissions from the proposed rule following the receipt of public comments. It requires continuous emissions monitoring and quarterly reporting for most commercial sterilizers to ensure that emissions are controlled. Notably, the EtO Rule establishes revised standards for existing sources such as sterilization chamber vents and aeration room vents, as well as for previously unregulated emissions that escape via building leaks and chamber exhaust vents.

New SEC Climate-Related Disclosure Rule

Margaret Anne Hill and Holli B. Packer ●

On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted amendments to the disclosure rules under the Securities Act of 1933 and the Securities Exchange Act of 1934. Although the final rule is a scaled-back version of the proposal published on March 21, 2022, the new rule will require many publicly traded companies to disclose both their direct and indirect emissions, also known as “Scope 1” and “Scope 2” emissions, provided the emissions are material. Companies must also disclose to investors their climate-related risks, including information about financial harm caused by severe weather events and other natural events. The new rule will be phased in beginning with the filing of annual reports for the year ending December 31, 2025.

Of significance to the business community is the SEC’s decision to exclude the requirement to report Scope 3 emissions which would have required businesses to disclose all indirect greenhouse gas (“GHG”) emissions not otherwise included in a registrant’s Scope 2 emissions that occur in the upstream and downstream activities of the registrant’s value chain. In deciding to eliminate the requirement to report Scope 3 emissions, the SEC observed that “Scope 3 emissions typically result from the activities of third parties in a registrant’s value chain and, thus, collecting the appropriate data and calculating these emissions would potentially be more difficult than for Scopes 1 and 2 emissions.”

EPA Issues Supplemental Notice of Proposed Ruling to Implement the Vessel Incidental Discharge Act, Finally!

Jeanne M. Grasso and Dana S. Merkel

The U.S. Environmental Protection Agency (“EPA”) published a Supplemental Notice of Proposed Rulemaking (“SNPR”) on October 18, 2023, modifying its initial proposed rule from three years ago on performance standards for vessel incidental discharges. 2023-22879.pdf (govinfo.gov) The SNPR addressed only three limited areas—ballast water, hulls and associated niche areas, and graywater—and did not make any sweeping changes to the prior proposal of October 26, 2020. 2020-22385.pdf (govinfo.gov)

Background

In December 2018, the Vessel Incidental Discharge Act (“VIDA”) was signed into law, which amended the Clean Water Act (“CWA”) and was intended to replace the EPA’s 2013 Vessel General Permit (“VGP”) to bring uniformity, consistency, and certainty to the regulation of incidental discharges from U.S. and foreign-flag vessels. VIDA required EPA to finalize uniform performance standards for each type of incidental discharge by December 2020, a deadline that is nearly three years past, and requires the United States Coast Guard (“USCG”) to implement EPA’s final standards within two years thereafter.

In October 2020, EPA published a proposed rule titled Vessel Incidental Discharge National Standards of Performance to implement VIDA, but the proposal languished with the change from the Trump Administration to the Biden Administration. EPA’s delay in finalizing its performance standards prompted the Center for Biological Diversity and Friends of the Earth to file a lawsuit in February 2023 to force EPA to finalize its performance standards. Center for Biological Diversity, et al., v. Regan, et al., No. 3:23-cv-535 (N.D. Cal. 2023). The premise of the environmental groups’ complaint was that EPA’s inaction harmed aquatic ecosystems, with the principal allegations focused on ballast water discharges. The parties thereafter negotiated a Consent Decree that requires EPA to finalize its performance standards by September 23, 2024. To keep EPA accountable, EPA is also required to provide updates to the court every three months on the status of the rulemaking.

To read the full client alert, please visit our website.

Chevron Deference in Its Last Days?

Jane Thomas ●

In recent years, a string of cases has been brought before the Supreme Court of the United States (“SCOTUS”) challenging the Chevron doctrine, which states that courts should defer to a federal agency’s interpretation of an ambiguous statute as long as that interpretation is reasonable. Despite the numerous cases that have come before SCOTUS, the Court has never taken the step to overturn the landmark decision in Chevron v. Natural Resources Defense Council. This approach could change this year with already one case set to be heard in the fall term, as well as another petition for certiorari pending before the Court.

In Order No. 2023, FERC Takes Step in Reforming Transmission Grid Policies by Enacting Generator Interconnection Reforms

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas

On July 28, 2023, the Federal Energy Regulatory Commission (“FERC”) unanimously approved Order No. 2023, a Final Rule designed to streamline the process by which generation resources can connect to the interstate transmission grid.

At a high level, the Final Rule substantially revises the current pro forma large generator interconnection procedures (“LGIP”) and agreement (“LGIA”) with the following updates:

- - Replacing the current first-come, first-served process with a first-ready, first-served interconnection cluster study process.
  - Increasing the speed of interconnection queue processing by, among other things, imposing strict study deadlines and penalties on transmission providers.
  - Incorporating technological advancements into the interconnection process.

Order No. 2023 also makes changes to the small generator interconnection procedures (“SGIP”) and agreement (“SGIA”).

To read the full client alert, please visit our website.

The Beginning of the End of the Internal Combustion Engine? California to Phase Out Gas-Powered Vehicles by 2035

Robert C. Levicoff ●

A leader in stringent auto emission regulations, the State of California recently took additional steps in its effort to further protect the environment. On August 25, 2022, the California Air Resources Board (“CARB”) voted to require all new cars and light trucks sold in the state to be “zero-emission” by 2035.^[1] The plan, officially known as the CARB Advanced Clean Cars II rule, was originally introduced via executive order by Gov. Gavin Newsom nearly two years ago.^[2]

The plan mandates that “[i]t shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.”^[3]

Accounting for Change: FERC Proposes Accounting and Financial Reporting Reforms to Address Renewable Energy Assets

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

The Federal Energy Regulatory Commission (“FERC” or “Commission”) recently issued a Notice of Proposed Rulemaking (“NOPR”) to address industry concerns that FERC’s current Uniform System of Accounts (“USofA”) does not adequately account for renewable energy assets. The NOPR, which was released during the last Commission open meeting, proposes the following four categories of amendments to the USofA, as well as conforming revisions to FERC’s accounting reports:

- - Creating new production accounts specifically dedicated for wind, solar, and other non-hydro renewable assets;
  - Creating a single dedicated functional class for energy storage accounts;
  - Specifying the accounting treatment of renewable energy credits (“RECs”) and similar instruments by codifying prior Commission guidance; and
  - Adding new dedicated accounts for hardware, software, and communication equipment within existing functions in the USofA.

Additionally, the NOPR requests feedback on whether the FERC Chief Accountant should issue accounting guidance related to hydrogen.

To read the full client alert, please visit our website.

FERC Proposes Expansion of Duty of Candor Obligations

Mark R. Haskell and Charles J. Dickenson ^*

On July 28, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Notice of Proposed Rulemaking (the “Notice”) in Docket No. RM22-20-000 to expand the scope of the duty of candor to all entities making communications on matters subject to the jurisdiction of the Commission.

Through the Notice, the Commission explains that it intends to fill in a “patchwork” of existing rules and regulations concerning a regulated entity’s obligation to provide accurate and truthful information to the Commission. For example, the Commission’s current rules require that a variety of submissions to FERC, such as periodic or annual reports, written statements in investigations, filings, and testimony and evidence, be submitted under oath. Similarly, Commission precedent imposes a requirement on pipeline applicants seeking certificates of public convenience and necessity under Section 7 of the Natural Gas Act (“NGA”) to disclose “fully and forthrightly . . . all information relevant to the application.” In addition, in any filing with the Commission, the signature required for each filing constitutes a certification that “[t]he contents are true as stated, to the best knowledge and belief of the signer.”

To read the full client alert, please visit our website.

^{* The views expressed in this publication are those of the authors only and do not necessarily reflect the views of the law firm of Blank Rome LLP or any entity represented by the firm.}

Supreme Court Limits EPA’s Authority under the Clean Air Act

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun ●

After seven years, three presidential administrations, and two appearances before the Supreme Court, the Obama Administration’s “Clean Power Plan” (“CPP”)—a Clean Air Act regulation designed to limit carbon emissions from existing coal-fired power plants (and later revised by the Trump-era “Affordable Clean Energy” (“ACE”) rule)—was struck down by the Supreme Court on June 30, 2022. See West Virginia et al. v. Environmental Protection Agency et al., No. 20-1530.

Relying on Section 111(d) of the Clean Air Act (“CAA”), the Environmental Protection Agency’s (“EPA’s”) CPP set a carbon emission limit that was essentially unattainable for existing coal-fired power plants. Consequently, EPA determined that the “best system of emission reduction” for carbon from these plants was to cause a “generation shift” from higher carbon emitting coal-fired sources to lower-emitting sources, such as natural gas plants or wind or solar energy facilities. Compliance with the CPP would have required a plant operator to: (1) reduce the amount of electricity the plant generated to reduce the plant’s carbon emissions; (2) build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and increase generation there; or (3) purchase emission allowances as part of a cap-and-trade regime. See West Virginia at 8.

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